Role of Information Technology in Real Estate

Uploaded by Shailesh on Oct 12, 2007

INTRODUCTION

The real estate industry brings together people and information. For example, information from a real estate developer’s job site may be shared with field operations, production scheduling, accounting, sales and many other internal departments. Not only is the information shared internally, but also with outside business s such as architectural and engineering firms.

In order to understand the role of IT in real estate related companies, the nature of the real estate industry in general should be considered.

Real estate is generally characterized as having a three-phased cycle including inventory Absorption, New Development and Contraction due to excess supply.

As the economy expands, the demand for real estate gradually begins to grow.

This initial growth results in the gradual absorption of residential and commercial properties.

Office vacancies start to decline as empty space is absorbed, rents begin to stabilize and eventually start to rise.

At first, rents remain below the levels needed to make new construction possible. After a period of time, as demand accelerates, markets tighten and rent rises sharply causing property prices to start to rise. IT projects that were put on hold during the previous real estate down cycle remain on hold until cash flow improves. Employees make due with existing computer equipment until financial situation improves.

Computers and the Internet have been billed as enabling new ways of doing business, but in the residential real estate industry, people's expanded access to information hasn't rendered the real estate agent a relic, says a Penn State researcher. "The expectation was that real estate agents would go away once consumers could see all the home listing information, but the number of real estate agents has increased, not decreased, in the last 10 years," says Steve Sawyer, associate professor in the School of Information Sciences and Technology (IST).

So has the number of people involved in real-estate transactions--contrary to the assumption that information technologies would streamline and simplify the transaction process. Instead, the amount of relevant information about real estate has exploded, requiring more people and more specialized professionals to be involved in supporting, understanding and processing that information.

Those insights into the changes in the real estate industry due to the use of computing are discussed in a research article, "Redefining Access: Uses and Roles of Information and Communication Technologies in the U.S. Residential Real Estate Industry from 1995 to 2005," published recently in the Journal of Information Technology.